Work Contract - VAT, CST, Service Tax
VAT is a location based tax, ie tax is applicable in the state where you sell your goods. If you sell your goods in Hydrabad to a buyer in Karnataka, then CST of 2% will be applicable if you have CST registration and also buyer has the TIN to give you C-form.
The best option is sell all materials from Hydrabad, obtain C-form from buyer in Hubli.
Once the buyer become owner of goods, you can do your work here and charge labour charges only. Incase you are charging whole contract at a single basis, you need to obtain a vat registration in Karnataka as a work contractor.